The Threat of New Tariffs Shows That Trade Uncertainty is Here to Stay

Hopes that former President Donald Trump’s trade war strategy was winding down were dashed after his most recent tariff threats reignited global market fears and business uncertainty. Investors and business leaders had begun to feel reassured following initial trade deals with the UK and China, thinking that Trump might be reversing course on the steepest U.S. tariffs seen in nearly a hundred years. But those hopes were quickly dismissed when Trump signaled he wasn’t ready to step back from his aggressive trade stance.

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On Friday, he threatened to impose a 50% tariff on goods from the European Union and a 25% tax on smartphones unless major tech manufacturers, including Apple and Samsung, shifted production to the United States. The announcement shocked global markets. Stocks dropped across international exchanges, the U.S. dollar hit its lowest level since 2023, and business leaders were once again reminded of the unpredictable nature of Trump’s trade policies.

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“This is what we should expect for the next two months, maybe even the rest of the year,” said Marcus Noland of the Peterson Institute for International Economics. “Trump hasn’t backed off at all.”

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Indeed, Trump underscored his combative approach from the Oval Office that same day, stating bluntly that he wasn’t seeking a deal with the EU. “It’s time we play the game my way,” he told reporters.

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His defiant tone stood in contrast to a major legislative victory he had just secured. Earlier in the week, Congress passed his sweeping tax and spending package after intense lobbying by the White House. Aides suggested that the president hoped to reach more trade agreements during a 90-day pause in tariff hikes announced on April 2, with some negotiations reportedly nearing completion. Treasury Secretary Scott Bessent even hinted that a deal with India could be close.

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Despite those discussions, Trump’s directive on EU tariffs hinted at his broader strategy — setting tariff rates unilaterally rather than through prolonged negotiations. Bessent tried to downplay the president’s latest outburst, calling the EU an “exception” and maintaining that several deals were close to being finalized.

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Commerce Secretary Howard Lutnick echoed that view, labeling the EU “very difficult” in recent talks. Meanwhile, former Trump adviser Steve Bannon described the president’s response as frustration over a lack of progress at a recent G7 finance ministers meeting. Bannon noted that countries without pending agreements should be on high alert, calling Trump’s threats a “storm warning.”

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Trump didn’t shy away from defending his tariff agenda. He threw his support behind a deal between U.S. Steel and Japan’s Nippon Steel, crediting his trade policies for helping finalize the long-discussed partnership. That endorsement came while Japanese officials were in Washington, engaged in their own trade talks with the U.S.

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Across the Atlantic, the EU is preparing for the possibility of negotiations breaking down. The bloc is readying retaliatory tariffs worth €95 billion ($107 billion) on U.S. exports if Trump’s new trade actions move forward. This follows a prior agreement between European nations to temporarily suspend their own tariffs for 90 days after Trump scaled back some of his rates on EU goods.

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According to Lutnick, the administration hopes to clarify its positions with most countries by summer. He reiterated that few, if any, trade partners would be offered a rate lower than 10%. Still, he emphasized that negotiations remain open.

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“If a country gives us a compelling offer to revise tariffs, we’ll consider it,” Lutnick said. “If not, the president will let them know their new rate by letter.”

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Though Trump paused some tariff hikes in April, a 10% base rate still applies to most nations, while separate levies on steel, aluminum, and automobiles remain in effect. He has also floated the idea of new import taxes on copper, semiconductors, pharmaceuticals, lumber, and aircraft parts — all of which could increase the average tariff rate significantly.

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Goldman Sachs analysts predict that the U.S. tariff burden could grow by 13 percentage points this year, reaching levels unseen since the 1930s. However, the bank also questioned the effectiveness of the policy, warning that such tariffs are unlikely to trigger a significant increase in domestic manufacturing — a key goal for Trump.

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Meanwhile, talks continue with countries like India, Japan, Vietnam, and Israel, suggesting that some temporary relief could still materialize. However, Trump’s tendency to abruptly impose tariffs, even on allies with existing trade agreements, continues to cast doubt over the stability of any pact.

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“It’s remarkable,” Noland added. “We’ve had solid agreements with countries like Korea and Australia, and yet they’re still being hit with tariffs. That kind of behavior is deeply unsettling for U.S. trade partners around the world.”

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